Editorial: What’s the tipping point for bond debt? Midland’s not there yet

Midland Reporter-Telegram

Published
12:35 pm CST, Thursday, January 23, 2014

The amount of total debt payments by Midland’s five taxing entities is more than $700 million and counting.

Does anyone care? We asked the question because we don’t hear people talking about it.

When we asked community leaders how much total debt payment is right for a community such as Midland, they said they didn’t know. And we don’t get much response either way from our readers.

For years, the Reporter-Telegram has been one of the few voices that even mentions the bond debt that taxing entities carry.

In Wednesday’s edition, we offered a story about the Texas Bond Review Board report that Midland’s taxing entities are claiming more than $714 million in total debt payments (principal and interest) as of Aug. 31, 2013 -- an increase of nearly $46 million compared to the previous year. The $714 million will increase. MISD still has $90 million in bonds to take out from the November 2012 bond referendum.

That figure also does not count the $452 million in total bond payments for the Midland County Fresh Water Supply District No. 1. Those bonds are related to the construction of the T-Bar Ranch pipeline from Winkler County to Midland. The district must sell water to pay for that debt, so that burden likely falls on city of Midland customers.

So again we throw out the question, “How much does it matter?” We are not sure. We hear that as long as a credit rating is at a certain level, that’s really all that matters. Another comment we hear is that the debt at the federal level is a greater concern.

The fact is most of the debt -- the hospital bond, school and college bonds, jail bond and some city bond debt -- was voter-approved. City and county officials have voted to take on more debt in the form of certificates of obligation to fund projects. And again, these actions were met without resistance. In the most recent city council elections, bond debt was not a high-profile issue and not a concern of the three who won in November.

In our view, there are important decisions that Midlanders will make in the next few years. Some of those decisions will have an impact on the amount of debt this community is ready to carry. So we think it is important to communicate to residents all the facts about this community’s debt.

However, in our view, this community and its leaders have spoken clearly that there isn’t a problem with the current debt level.

And in the end, the residents of Midland may prove to be very comfortable with total debt payment in excess of $1 billion. If that is the case, let’s get to work.

2014

Principal Interest Total Payment

Midland County $26,495,000 $10,483,565 $36,978,565

Midland Junior College $42,712,052 $14,388,377 $57,100,429

City of Midland $120,385,000 $54,306,713 $174,691,713

Hospital District $115,965,000 $71,339,339 $187,304,339

Midland ISD $164,061,365 $94,114,353 $258,175,718

Total $469,618,417 $244,632,347 $714,250,764

Freshwater District $196,576,160 $256,328,392 $452,904,553

Source: Texas Bond Review Board

Note: Numbers based on fiscal year end of Aug. 31, 2013, according to TBRB